The United Nations Security Council passed its eighth resolution on North Korea's nuclear program last week, and nobody expects this one to have much more impact than its predecessors. The new sanctions make it a bit harder for the Kim regime to sell arms abroad and procure luxury goods for the ruling elite, but it will still be able to earn sufficient foreign exchange to import necessities for its bare-bones Stalinist economy.
However, there is one part of the sanctions that the Obama Administration could wield to great effect, if it wants to. Banks in U.N. member countries are required to stop handling funds that could be used in the North's nuclear or missile programs. Interpreted broadly, that could be used to cut off all banks doing business with the North from U.S. clearing systems.
Former U.S. National Security Council official David Asher testified last week before the House Foreign Affairs Committee that the Bush administration discovered financial interdiction was one way to cause enough economic pain for Pyongyang to sit up and pay attention. Even without using sanctions, the North Korean Illicit Activities Initiative was able to investigate criminal acts such as drug dealing and counterfeiting, and it used "law enforcement, sensitive diplomacy and other tools to strategically interfere with the Kim regime's financial lifelines."
The culmination of Mr. Asher's effort came in 2005, when the U.S. accused a small Macau bank, Banco Delta Asia, of money laundering and forced it to freeze $25 million believed to belong to the Kim family. That touched a nerve since it threatened the leaders' private wealth, estimated in the billions of dollars. It also put other financial institutions on notice that dealing with North Koreans could put them in a world of trouble.
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